World markets had a volatile February as the Trump tariff tantrum raised investor concerns regarding the potentially negative impact the Trump administration’s policies could have on the US economy as well as the fact that 'risk-off' sentiment prevailed. Concerns continued regarding continuing higher inflation and its impact on the US rate cutting cycle, as well as escalating geopolitical tensions between the US and China, and the US and Europe continued to weigh.

US markets were weaker in February, with the S&P 500 ending down by 1.4%, the Dow Jones weaker by 1.6%, and the Nasdaq being the worst performer, ending the month lower by 4%. On the economics front January headline inflation (CPI) printed higher than expected at 3.0% YoY, signalling renewed price pressures, while core CPI, excluding food and energy, printed at 3.3% YoY. Core personal consumption expenditure (PCE) for January also excluding food and energy, and the Fed’s preferred inflation gauge, printed at 2.6% YoY, down from the upwardly revised 2.9% YoY print for December. Commentary from the Fed indicated that higher for longer rates were at the forefront of their thinking with inflation concerns having an impact on the urgency to cut rates. During his presentation to the US Congress, the Fed Chairman, Jerome Powell, reiterated that there is no rush to cut rates again, and although the US Economy remains strong, the uncertainty about future policy decisions persists.

By contrast, the UK market ended the month on a stronger footing, closing higher by 1.6%. While the inflation numbers for January shot up unexpectedly to 3.0% compared to the December number of 2.5%. Core inflation also printed higher in January at 3.7% vs the December figure of 3.2%.

Although taking strain from the threatened Unites States’ 25% potential tariff hikes on the EU, the European markets shrugged this off, ending the month in the black. The Dax ended the month higher by 3.8%, after the elections in Germany. Chancellor elect, Frederich Merz, sought to ease the rift with the US as Trump continues to lean towards Russia. In France, the Cac closed the month higher by 2%. On the economics front, January headline inflation in the Eurozone rose for the fourth straight month printing at 2.5% YoY compared to the January number of 2.4% YoY, while core inflation remained steady at 2.7% for the fifth month.

Asian markets were volatile in February as President Trump firmly fixed his attention on China, as differences on trade investment and other issues heightened the risk of worsening relations between the two superpowers. Chinese markets regained some ground as positive steps were taken by President Xi Jinping in meeting with the country’s top private sector leaders to boost economic rescue efforts. Encouraging the private sector’s role in reviving the stuttering Chinese economy has been viewed positively. The Hang Seng was higher by 13.4%, while the Shanghai Composite was firmer by 2.2%. Chinese official manufacturing PMI for February expanded to 50.2, beating expectations, compared to the 49.1 print in January. The Chinese non-manufacturing PMI, which includes construction and services, climbed to 50.4 vs the January print of 50.2.

In Japan, the Nikkei experienced a significant decline of 6.9% for the month, largely due to a sell-off in chip related companies, as well as concerns regarding how higher tariffs would affect their market. Japanese core inflation for January rose 3.2% YoY, higher than expected and reinforcing persistent price pressure concerns. Japanese overall inflation, which includes fresh food, printed at 4.0% while fourth quarter GDP grew 0.7% QoQ, beating market expectations of 0.3% and accelerating from the upwardly revised 0.4% expansion in Q3 2024.

South Africa

On the local front, the market closed marginally softer by 0.02% for the month with the resources sector being the poorest performer, down 6.2%. The industrial sector was the best performer, up 3.6% for the month, with financials following suit, also firmer by 1.8%, while the property sector weakened by 0.3%. Standout share performers for the month were Anheuser Busch, up 20.9%, Naspers and Prosus 12.3% and 11.6% respectively and WeBuy Cars, and Telkom up 10.5% and 8.0% respectively. Underperforming shares were Northam down 23.6%, Sibanye Stillwater down 21.8%, Thungela down 19.2%, Motus down 17.7% and African Rainbow Minerals and Harmony, weaker by 16.6% and 15.9%, respectively. 

Headline inflation printed slightly higher at 3.2% YoY in January compared to the 3.0% YoY print of December, with core inflation easing for the fourth month to 3.5% YoY vs the December print of 3.6% YoY. Note that the data was the first release since the updating of the Stats SA CPI basket. We also saw the unprecedented postponement of the National Budget at the last minute on the 19th of February, with the major sticking point being the proposed two percentage point increase in VAT, which Treasury earmarked to fund additional spending on the bloated public sector and continued social grant payments. The postponed budget was finally delivered on Wednesday, 12 March 2025.